Industrial Production Declined 1.1 Percent in 2019 After Two Years of Growth

RIO DE JANEIRO, BRAZIL – Brazilian industrial production dropped 1.1 percent in 2019, according to an indicator released by the Brazilian Institute of Geography and Statistics (IBGE), interrupting a two-year growth period from 2017 (2.5 percent) and 2018 (one percent).

In December, domestic industrial production recorded a 0.7 percent decline compared to November, above the expected 0.5 percent drop, according to the Bloomberg consensus. In relation to December 2018, industry declined 1.2 percent, compared to an estimated 0.8 percent drop.

With these results, the industrial sector retreated both at the end of the fourth quarter of 2019 (-0.6 percent) and in the accumulated second semester of the year (-0.9 percent), against the same periods a year earlier.

Three of the four major economic categories and 17 of the 26 sectors surveyed showed a reduction in industrial activity from November to December 2019. Among the sectors, the most important negative influences were motor vehicles, trailers and bodywork (-4.7 percent) and machinery and equipment (-7.0 percent), with the former accumulating a 9.7 percent decline in production in three consecutive months; and the latter intensifying the 2.0 percent loss recorded in November 2019.

Other significant negative contributions came from extractive industries (-1.4 percent), pharmaceuticals and pharmochemicals (-6.2 percent), leather goods, travel goods and footwear (-6.6 percent), metalwork (-1.9 percent), rubber and plastic products (-2.5 percent), non-metallic mineral products (-1.8 percent) and machinery, equipment and electrical materials (-2.5 percent).

Among the nine sectors that increased production that month, the most important performance for the global average was recorded by coke, oil products and biofuels (4.2 percent), which boosted the pace of growth noted the previous month (1.7 percent).

The positive results were recorded by the printing and reproduction of engravings (39.8 percent) and clothing and accessories manufacturing sectors (5.3 percent), with the former driven largely by special orders and showing growth for the third consecutive month after retreating 29.3 percent in September 2019; and the latter advancing for the second consecutive month and accumulating a 7.3 percent growth in that period.

Among the major economic categories, in comparison with the immediately preceding month, by retreating 8.8 percent, capital goods recorded the sharpest drop in December 2019 and continued the predominantly negative behavior present since May 2019, accumulating a 12.9 percent reduction in that period. The December result was the sharpest drop since May 2018 (-18.5 percent).

“The effects on the extractive industry as a result of the collapse of the Brumadinho dam at the beginning of 2019 were very significant to these negative results”, stressed the Institute’s research manager, André Macedo.

Source: Infomoney